The purpose of the proposed research is to examine the operation of the private capital markets in the health industry. The impact of private capital markets on health care will be explored with particular emphasis placed on the acquisition and management of capital. While the research will encompass the entire range of capital financing alternatives, the major focus will be placed on the use of institutional bonds for the capital financing of health care facilities and influence of such financing on the debt management of these institutions. Included in the area of debt management, the research will explore the life of various issues in relation to the expected life of new or anticipated assets. With the decline in traditional sources of capital financing such as philanthropy and the Hill-Burton program coupled with the inability of internally generated funds to supply adequate amounts of capital, it is increasingly important that the characteristics of institutional bonds and their markets be understood more fully by the management of such institutions. The proposed research project will provide the health care industry, investment banking community, and other vested interests such as the federal government and third party insurers with a frame of reference to understand the uses of this type of instrument and what might be done by government and private interests to encourage greater utilization of the private capital markets. Special attention will be given to the institutional constraints hampering the more widespread use of private sources of capital and apparent imperfections in the markets for institutional securities. If the production of health care services is to be as efficient and economical as possible, it is important that the benefits of financial leverage be optimized within the capital structure of these institutions.